Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

September 12, 2013
Does the sale of appreciated stock increase my income?

Q: I plan to retire in a couple of years and am strategizing my money options for maximum gain. Therefore I am allowing myself 12 years to roll over as much money as possible from 401k and 457 to Roth IRA. I am targeting to keep my income below the $250,000 threshold for married filing jt. I want to pay the taxes with my taxable account. I will have to sell LT appreciated stock. Does the sale of the appreciated stock count toward the $250,000 threshold? If so, then I suppose I will have to start selling off my stock now to bring up the cost basis in time for retirement when my income will ramp up due to the conversions.

Lady Lee
Sacramento, CA

September 5, 2013
Can overlooked heir receive IRA proceeds without tax consequences?

Q: My 94-year-old widowed mother recently died. Her will divides her estate equally among 3 adult children. However, she had various IRA accounts. On one rather large account, she only listed my sister and me as beneficiaries, inadvertently excluding my brother. Since these IRAs need to be rolled over to prevent huge tax consequences for us, is there any way to give my overlooked brother his share (about $100K) without incurring tax liability? He wants to get the money this year rather than $14K per year over time, the maximum gift allowance. Thank you.

Sacramento, CA

September 3, 2013
Are there any tax breaks with respect to an inherited home?

Q: "Hello,
I inherited my Dad's home in 2009 after he passed away in January of 2009. I continued to pay the mortgage but last year (2012) added some improvements to get the house ready for sale. It sold in September 2012 with me owing $18,000 on the mortgage. (It was paid off at closing). What kind of tax breaks are available to me ?

Thanks so much,
Canton, GA

August 18, 2013
Why do I have to pay alternative minimum tax?

Q: I have never qualified for the alternative minimum tax in past years. This year I retired and sold my house, which I had to report capital gains on. Do I have to pay Alternative Minimum Tax just because the capital gains pushed me into that tax bracket? Or is Alternative Minimum Tax only on Income received, not including capital gains (since it's only a one-time source of income)? Thanks for your help.

Elk Grove, CA

August 12, 2013
Is there an income tax impact from an inheritance?

Q: My parents passed away in 2007. The succession of their estate was completed in 2008. In March 2013 I searched the web site and discovered that the state of Maryland had unclaimed property belonging to my parents. The property was Lockheed Martin Corporation stock. The stock was sold by the state after receiving it. I filed a claim and received a check. Is there an income tax impact from this inheritance?

M. Doyle
El Dorado Hills, CA

August 12, 2013
What are the tax consequences of selling my rental residence?

Q: What are the income tax consequences of selling my residential rental property in 2013? I purchased the property in Gold River in 1997 for $255,000. It was my primary residence until 2006 at which time it became my rental property. Its value in 2006 was approximately $525,000. I sold it in 2013 for $420,000.

During the 7+ years as a rental, I depreciated the property on my income taxes each year. I made no major improvements or other changes during the 16 years that I owned the property. Is there a way to avoid, minimize or shelter the income taxes that will be due in 2013?

Chico, CA

August 11, 2013
Can I avoid paying taxes on the interest when I cash U.S. savings bonds?

Q: I own U.S. savings bonds that will no longer earn interest in 2015. My question is: If I cash them in, is there any way I can avoid paying tax on that interest? I would like to give the money to my three children, but I cannot afford to pay taxes on a large amount. I am an 80-year-old widow on a fixed income. Thank you.


August 11, 2013
How do I get copies of trust tax returns from the IRS?

Q: My friend's inheritance was managed by her husband. After their falling out, he refused to divulge where it was kept. It is unknown if the courts will be able to force him to while the divorce is under way. When she tried to get old tax returns to see where her inheritance-based income came from, so she could go find it herself, the IRS redirected her to collections, for the reason that her husband had not paid the taxes correctly and they owed back taxes. The only way she can pay the back taxes is if she regains control of her money. How does she find the right IRS person to let her look at her old tax returns and find out where her money is / was? I hired a tax CPA for her and so far he hits the same wall.

Sacramento, CA

July 22, 2013
Can I avoid a penalty on a withdrawal from my 457 account?

Q: I had a 457(k) withdrawal of $50,000. The IRS wants me to pay $20,000 in penalties, which is almost half of what I took out. How do I put a stress claim in?


July 12, 2013
How can I fix an IRA custodian's error on a trustee-to-trustee transfer?

Q: I switched custodian for my Traditional and Roth IRA back in March 2012. It was a direct transfer from one custodian to another. Prior to filing taxes this year, I called the prior custodian and asked if I am getting any 1099 form. The former custodian said that because it was a direct transfer, I do not get any tax form.

I recently discovered that the new custodian made an error and put one of my traditional funds into a Roth IRA instead of a Traditional IRA during the transfer.

I filled the direct transfer form correctly so the error was not on my part. But the balance of my current Roth IRA has part of my traditional IRA amount prior to the transfer.

Can I get this fixed and if so, how? What is my tax liability if any? I really do not want to do any conversion and what the current custodian to fix it since the error was on their part.

Elk Grove, CA

May 20, 2013
Do I need to amend my tax return for a $20 correction on a 1099?

Q: I filed my federal return on May 10th and received an amended 1099 dated March 15th, then a second amended 1099 dated April 1st, and then a 3rd amended 1099 dated April 15th! The total net changes are less than $20. Filing a 1040x for 2012 seems like a lot of pointless work. Can I account for these changes on my 2013 federal return rather than file a 1040x for 2012? Thanks for your help.

Elkton, Maryland

May 20, 2013
Should my wife transfer her IRA to our living trust?

Q: My wife and I are retired and she is required to take funds out of her retirement IRA. Several years before we retired, we established a living trust which includes most of our assets. Now, we want to transfer her retirement IRA to the trust. We have been told that, by transferring her IRA to the trust, she would be required to pay substantial income tax. Is it possible to make the transfer without having to pay taxes at the time of the transfer?


May 20, 2013
Do tax preparers ever quote fees before preparing returns?

My wife and I are both retired and have no mortgage. Because of this we use the standard deduction and have a very simple tax return. We each receive a 1099R and a SSA-1099. We also receive a consolidated form 1099 for investments. We have no other dependents or deductions.

We usually get a large refund because we choose to have taxes taken out of our monthly checks. About 6 or 7 years ago, our tax preparer charged what I felt was too much to do our taxes. Each of the following two years, I changed tax preparers. Each year the return cost a little more than the year before, with the final year being $350. None of the preparers would give us an estimation of costs prior to doing the return.

Each year I took in the previous year's return to simplify the preparer's job. I have been doing my taxes myself with tax software the last 4 years.

My question: How do you find a tax preparer who is willing to give you an estimate of the cost BEFORE you have them start your return?
Thanks for your time.

Corning, CA

May 13, 2013
Can my son claim education tax credits if I claim his dependency exemption?

Q: I made $80,000 and TurboTax said I was disqualified from deducting the interest I paid to federal government on the parent loan and/or the tuition I paid. Out of pocket, both totaled over $20,000. I know I would only have received the tax education credit on the out of pocket tuition I paid but since I can't take it, can my son?
Although he was a full-time student, he made about $20,000 working part time at a restaurant and singing at a church. My status is a qualified widow..because my husband died in 2011 I was able to file joint and married.. so the threshold was 160,000 ..he had been disabled and had no income it was same source of guns..seems to penalize non married people whose income is same as two married people. Anyway if I claim my son, can he take the deductions I was not able to? I assume TurboTax was correct in saying I wasn't eligible.

Sacramento, CA

May 13, 2013
Can I deduct depreciation on my 50 percent interest in a property?

Q: I own a property with a sibling in a 50/50 Percentage Ownership. With depreciation tax deductions, do we divide that depreciation deduction by the percentage of ownership? That is what I understood is the federal tax law. My sibling's tax preparer states that we cannot divide it, that only one person can claim it and that we can take turns claiming the whole deduction. Thanks for any clarification you can provide.

Sacramento, CA

May 13, 2013
What is the tax basis in a property received by gift or inheritance?

Q: My wife and her sister were deeded their mother's home 15 years ago. Their mother bought the home 45 years prior. What would be the tax base for determining capital gains?


April 11, 2013
How much detail should I submit with my tax return?

Q: I'm filing a Schedule D and Form 8949 for an inherited property held as an investment. The property was sold in 2012 and there is a net loss after deducting the real estate commission and expenses incurred to improve the value of the house, such as new kitchen floor, refinishing the wood floors, painting exterior and interior, and the cost of staging the house. Is there a way to itemized these expenses on either Sch D or form 8949 so the IRS can understand why I am claiming a net loss? Or should I not bother to itemized the expenses? Thanks

San Francisco

April 9, 2013
Am I able to deduct loss on sale of condo?

Q: In Feb. 2006 I bought a condo for my personal residence for $175k and put $35k down. I lived there until Nov. 2008 when I purchased a home here and moved. From Nov. 2008 until Sept. 2012 I rented the condo out at market rate. I short sold the condo in Sept. 2012 for $52k with the mortgage balance at $120k. There was a write off amount on the mortgage which I plan to counter by demonstrating insolvency. Am I able to write off any of my capital loss on the condo?

Roseville, CA

April 9, 2013
Can I file using head of household filing status?

Q: My accountant told me something I found unbelievable, and I felt I had to get a second opinion. I have been spending a substantial amount of money in recent years to support my uncle, who lived in an assisted-living facility until he died in early 2013.

I claimed him as a dependent through the years that I've been aiding him, and he's been in the nursing home. But I also filed my taxes under "single" filing status. This year, my accountant claimed that the IRS rules had changed, and that I could file as "head of household" because of my support of my uncle, even though he never lived with me.

This would save me a lot of money. But I can't believe it's legal.

Thanks much for any help you could provide.


April 5, 2013
Should I override my tax software or file a paper return?

Q: I refinanced my mortgage in 2012, which left a points balance that I had not yet fully deducted over the life of the loan. The IRS says I can deduct the remainder all at once in 2012 -- unless I refinanced with the same lender. Which I did. However, TurboTax and other online software programs do not make provision for a refinance with the same lender, instead, they are giving me the entire deduction for the points from my previous loan. In reality, I need to combine the points remainder with my new points -- and deduct all of them over the life of my new loan. I can juggle the numbers to make my return come out right (i.e. fake out the tax software), but I am thinking it might be safer to fill out the paper forms and mail them in. Advice? Thank you.

Sacramento, CA

April 4, 2013
What are the pros/cons of doing my own tax return?

Q: What are the advantages or disadvantages to doing your own taxes electronically rather than going to a professional tax preparer?

April 3, 2013
Why did I get a 1099-R reporting a distribution from my IRA?

Q: I contributed to my Roth IRA in 2011, but discovered when preparing my 2011 federal tax return that I wasn't qualified to make a Roth IRA contribution because of my income level. So I recharacterized my 2011 Roth contribution to a traditional IRA in March 2012. In August 2012, I converted this money back to my Roth IRA. My understanding was this series of transactions are considered legal and correct. I received a 2012 1099-R from my mutual fund, and it says this money I pulled out of my traditional IRA is taxable. I don't understand this, because I didn't deduct the recharacterized contribution to the traditional IRA on my 2011 tax return.

March 31, 2013
How much of early IRA withdrawal is subject to 10% penalty?

Q: My question has to do with the money I'm using from an IRA for all my closing costs on purchasing my first house. I'm looking to spend about $20,000. By taking money early from an IRA to buy a house, my understanding is that they only waive the 10% tax penalty on the first $10,000. That means anything I use beyond that I pay taxes on, PLUS 10%.
I'm trying to get an idea of whether or not I will owe taxes next year based on this additional taxable income. My income for 2013 will probably be around $72,000, not including the IRA distribution. I think my only credit is the child tax credit and as of 4/11 I claim single and 0. (Prior to this I claimed single and 5. I figure it's wise to pay more taxes this year). I will file as head of household in 2013.
Salem, OR

March 28, 2013
Do I have to amend my returns to report income on a late 1099 form?

Q: After receiving what I thought were all of my W-2s, 1099s etc., I filed my 2012 return. I owe on the federal but received a refund from the state. Last week I received a 1099 form from the mortgage company that owns our 2nd mortgage. During the course of the year, we were told that as a "good faith" customer, we would receive a check for $300 for making payments on time. We received a total of $800 from them. Besides being very late, what are the tax consequences of this amount? I see an amended return in my future.
Roseville, CA

March 22, 2013
How do I report sale of business assets?

Q: I am a triathlete. My wife & I are partners in a sports promotion LLC here in California. It only grosses about $25,000 a year and has about $12,000 of assets that are fully depreciated. We sold the business in December 2012 for $20,000. The sales price is $10,000 for the equipment & $10,000 for the company's name & reputation, or goodwill.
How do I report the sale? Is it reported on the LLC tax return? Are there any special forms that need to be filed with the CA Secretary of State or is the final 2012 LLC tax return all that needs to be prepared? Any help would be greatly appreciated. thank you.

Fresno, CA

March 19, 2013
How do I determine value of interest in land as of 2002?

Q. 170 vacant, unimproved acres (3/4 mile on beach), with ownership split 40 ways within extended family, sold to Land Conservancy in 2012. Our portion is about 1.2% and was given to us in 2002 by father. How do we determine value of property in 2002 for income tax purposes? No realtor in area (Santa Barbara Co.) can help us.

Meadow Vista, CA

March 19, 2013
How do we determine the 2002 value of land for tax purposes?

Q: We share ownership of 170 vacant, unimproved acres (3/4 mile on the beach), with ownership split 40 ways within our extended family. In 2012, the parcel was sold to to a land conservancy. Our portion is about 1.2 percent and was given to us in 2002 by a father. How do we determine the 2002 value of property for income tax purposes? No Realtor in the area (Santa Barbara County) seems able to help us.
Meadow Vista, CA

March 18, 2013
Is home a rental or a second home?

Q. My son lost his house to foreclosure in 2010. My wife and I purchased a foreclosed home in Sep 2012 for him and family to live in. We are sole property owners on the deed with my son making the mortgage, utility payments, closing cost repayment with additional money for needed repairs. I made repairs and improvements on the property in 2012. When his credit is re-established, our intent is for him to refinance the mortgage balance and purchase the house.
For tax purposes, since we bought the house, is this a rental property or a second home? If it is a rental property, I am not asking fair market rent for this property. However, I want to receive tax benefits for closing costs, taxes, insurance, improvements, etc. As long as he continues payment of all financial costs, we do not consider this home a money making investment, but an investment in my son's future. Please advise.
Sacramento, CA

March 1, 2013
How do I cancel my ex-spouse's use of our child's tax exemption?

Q: I have a tax return question. Last year, I signed IRS Form 8332 giving my then-husband the ability to claim our youngest son on his taxes. We were separated and in the midst of a divorce. After filing last year's return, our divorce was finalized.

In the divorce agreement, it was agreed that I would claim our youngest son on my taxes. We have two kids and they both live with me full time and occasionally visit their dad, who moved out of state. When preparing 2012 taxes, is there a form that needs to be fill out that cancels out the 8332 form that I signed last year?
Sacramento, CA

March 1, 2013
Should I use overtime paychecks for my 401(k) contribution?

Q: Would it be better tax-wise to use overtime cash payments (I think overtime payments are taxed much higher) at the end of the year to pay for my full year 401(k) contributions, rather than money from my paycheck?

Sacramento, CA

March 1, 2013
Can we deduct loss from sale of inherited house?

Q. My siblings and I (9 of us) inherited my mom's house in Oct 2009 which was in a trust. The market was down so we decided to wait until the market picked up before selling it. It was apprasied at $785K and we sold it in Nov 2012 for $810K. After subtracting real estate commission of 5% and other closing costs, the net to us was $763K. The net loss for each of us is $2,444. Can we deduct the capital loss against our income?

Oakland, CA

February 28, 2013
How do I report a loss on a foreclosure?

Q. As a power of attorney for my mother I sold her home in GA where she had lived for 18 years for $62M with a $5M downpayment and the balance to be paid in monthly installments to me to use to help with her support. She was 84 years old so no capital gain to report, in poor health and I had to move her cross country to live with me, then in assisted living and ultimately nursing home before her death. On the payments I received I reported the interest as income for 15 years. Then buyer stopped payments in 2011; foreclosure in mid 2012; sold property in Nov., 2012 at a tremendous loss. How do I report loss to IRS & CA? What forms? Can I take the entire loss ($30M) for 2012 or does it have to be spread out? Your detailed info will be much appreciated. Thank you.

Fresno, CA

January 26, 2013
When do I have to file a gift tax return?

Q: My understanding is that a gift to someone that is to be jointly shared with a spouse, even if it is less than the exclusion amount for the gift, must be reported on a gift tax return (Form 709) to the IRS. Is that true? In order to avoid estate settlement problems later, should gift tax returns be submitted for prior years in which gifts were given but no gift tax returns were submitted? Would there be penalties, fees, etc. for late returns (assuming that the life time exemption is not exceeded)? Is there an amnesty or forgiveness program for those who fess up to their ignorance of the law?
Sacramento, CA

January 26, 2013
What tax bracket am I in?

Q: I am planning and researching my retirement. Here is my tax question for tax year 2012.

I am filling single for 2012, my Gross income for 2012 was $60,010.29
I am contributing to my Simple IRA in 2012 $13,650.00
----------------- -
I paid in 2012 to my ex wife spousal support $ 3600.00
----------------- -
I am opening an tax-defered Traditional IRA for 2012 $ 6000.00
------------------ -
I have for the 2012 tax year medical bills of $ 3000.00
--------------- -
My question is: Do I fall in the IRS inflation adjusted bracket
at 15% because the $35,350?
Or do I still fall in the IRS inflation adjusted bracket at 25%
because the $85,650?
I look forward to hearing from you. Thank you.

January 26, 2013
When is the 6.2% FICA rate effective?

Q: I just received my pay check for the weeks of Dec. 9, thru Dec. 22, 2012. We are paid bi-weekly and they have already withheld 6.2% for Social Security that goes into effect in 2013. I'm paying the higher rate for wages earned in 2012; Don't they have to wait until 2013 to implement the higher tax rate? Thanks for any info.
Julie, Streamwood, IL

January 26, 2013
When is the 6.2% FICA rate effective?

Q: "I just received my pay check for the weeks of 12.09.2013 thru 12.22.2012 we are paid bi weekly, they have already withheld 6.2% for social security that goes into effect in 2013. I'm paying the higher rate for wages earned in 2012, don't they have to wait til 2013 to implement the higher tax rate?

Thanks for any info
Streamwood, IL

January 26, 2013
Do I need to file a tax return for my family trust?

Q: We recently set up a family trust. Are there any different tax forms needed to file our 2012 taxes? And if so, what are they? Thank you
Phil, Carmichael, CA

January 26, 2013
How do I report interest income from inherited CDs?

Q: I was executor of my mother's estate who passed away April 2011. She owned many CDs that matured at different dates and were staggered into 2012. I cared for my husband during his terminal illness and he passed away November 2011. Times were stressful and I only dealt with the CDs that matured in 2011. My question is how do I handle the reporting of the interest income on the 1099s to IRS for the CDs that were closed in 2012? Some were in my name only and others in my name and a sister's as co-beneficiaries. Thank you for any help in this matter.
Roseville, CA

January 25, 2013
IRS: Low-income workers could get up to $5,800 tax refund

Low-income workers got a friendly reminder from the IRS today: You could be eligible for up to $5,800 in refundable tax credits.

Known as the "Earned Income Tax Credit," it's intended to help low-to-moderate-income workers who earned up to $50,270 in 2012.

But as many as one in five eligible taxpayers never sign up. "This year, millions of workers could qualify for EITC for the first time, and the IRS urges them not to overlook this valuable credit," said acting IRS commissioner Steven T. Miller, in a statement.

November 17, 2012
Are there tax breaks for sending a child to private school?

Q: Both my wife and I have to commute to different areas everyday for work and it makes it impossible for my daughter to go to the public school we are zoned for. We send her to a private elementary school near where my wife works. Is there any tax breaks we can use from having to send our child to a private school because of our work locations?

Thank you for your help,


November 9, 2012
Is there a penalty if I cash in my Roth IRA?

Q: I just completed 5 years with the school district and have become eligible to purchase air time. This option will end January 1, so it's really making me think it's something I should seriously consider. It's pretty expensive, about $6,000 per year purchased. I was wondering what the penalty would be if I cashed in my Roth IRA - about $10,000 - to use as a down payment on the air time ($3,000 for 5 yrs). I haven't looked at my statements lately, but I think much of it is not earned, but is original principal. Do you have to pay a penalty if all the funds are your own? CalPERS will not allow a rollover from a Roth IRA.
I sure appreciate your help.


November 9, 2012
Will I have to pay 3.8% Medicare tax on the sale of my home?

Q: I have received emails saying that if you sell your home in 2013, you must pay a 3.8% Medicare tax on the sale. This greatly concerns me because I will be putting my home on the market next year. Do you know anything about this? Is it true or just another urban legend? Thank you for your help.

Loomis, CA

November 9, 2012
Which education tax break is best?

Q: We have about $6K in a 529 for our daughter's college expenses. Now that she is a freshman, we have incurred a few expenses: $1,200 laptop, $700 payment and books. My question is this: Is it better to withdraw the funds from our 529, or use the education credit on our federal tax return? I know I can't use both and I'm not clear about the education credit options. Reading the IRS site, it appears you can't use the American
Opportunity for room and board. She did receive the CSU Cal grant of approx. $3K per semester, a $1,000 Pell Grant, and a $1,000 scholarship. I don't want to make a withdrawal from the 529 until I'm sure that I'm unable to use the credit.


November 5, 2012
Will I owe taxes if I cash out whole life insurance policies?

Q: Over 40 years ago my husband and I purchased whole life insurance policies. Over time we took out policies on our children as well. We didn't always have enough money to pay the premiums so our agent suggested we borrow from some policies to pay premiums on others. We've been doing this for years now and the loans against the policies are large. We are retired now and still paying every month for these policies. We'd like to get out from under the premium payments, but have been told that we would have to pay taxes on the loans. If we pay off each policy and then cash them in, would we owe taxes on the cash value? Thank you for the help.
Antelope, CA

November 5, 2012
Should I have taxes withheld from an inherited IRA?

I will receive an inherited IRA. When cashing it out, should I have taxes withheld?


November 5, 2012
Are there inheritance taxes on stock I leave to my heirs?

Q: I wish to will money held in an account at a major stock trading firm to one of my children for distribution among my adult children and grandchildren. Are there inheritance and/or gift taxes involved in the passing of this money (which is in stock)?

Rio Vista

October 16, 2012
Can I pay back taxes in monthly installments?

Q. I currently owe federal taxes in the amount of $12,200 and California state of $11,000. I understand and have contacted three companies that say they can help me, but I have to pay them $3,000 to $5,000. The IRS is taking over $1,500 out of my retirement and I am having problems taking care of my bills. Do you know of any company that will let you pay monthly payments? I don't work but get Social Security and military retirement. I would appreciate whatever help you can give me. Thank you! Phil, Citrus Heights

October 16, 2012
Do heirs pay tax on sale of inherited residence?

Q. My mother-in-law put her home in a family revocable trust fund. She took out a reverse mortgage to pay for home health aide. She passed away in 2010. The trust fund became Irrevocable upon her death. We couldn't sell the house, so all five siblings paid off the reverse mortgage (checks were written to the family trust fund). The house was appraised at $300,000 when reverse mortgage was taken out six months before her death. It has now appraised for $279,000. If/when the house sells, do the heirs pay capital gains tax on all the money that is distributed? Or, does each sibling get to deduct the amount that was paid toward the reverse mortgage first? Cathy, Roseville, CA

September 26, 2012
Are there any tax benefits for elementary school tuition?

Q: We recently started our son in private elementary school in the fifth grade. Do you know of any federal/state tax income tax benefit on the monthly tuition we are paying? Any way we can route the payments to get federal/state income tax benefits? I heard the term "School Voucher" but could not find much detail on it. Appreciate your thoughts or guidance on the subject. Thanks, Shevtank, San Diego, CA

September 16, 2012
How can I get rid of ex's IRS lien on house after divorce?

Q: Hi, I was divorced two or three years prior to the settlement of assets. The house was "inner spousal transferred" to me with an IRS lien attached with my ex's name only. I had always filed separately. He had a business and it stemmed from that, not in my name. I have talked with an IRS agent and was told it is not my debt. The lien was put on before the settlement. I have refinanced two times since the transfer took place. We are trying to take care of some settlement issues regarding his child support arrears and house money I owe him (house money I owe is from settlement). We would like to zero the two issues out so we don't owe each other but I do not want to be held liable for his liens. How do liens work when it is against an individual? I am at a loss. Please advise. Thank you Debi, Citrus Heights, CA

September 7, 2012
How do I pay taxes on a 401(k) hardship withdrawal?

Q: I had a hardship withdrawal from my 401(k) in 2012 to pay for my mortgage. I did not pre-pay any tax or penalty. I understand that when I file my 2012 tax return, I have to pay tax and penalty on the amount I withdrew. However, I can imagine that it is a rather hefty amount and I may not have enough money to pay it. What are my option(s)? -- Thank you, Elk Grove

August 27, 2012
IRS wants volunteer tax preparers; no experience necessary

Want to be an IRS tax preparer? The IRS is seeking volunteers to provide free tax help to seniors as well as taxpayers who are low-income, disabled or with limited English skills.

Calling it "people helping people," the IRS requires no previous experience. Volunteers will be trained and certified in how to prepare simple individual tax returns that can be filed electronically. Other volunteer jobs, such as greeters at tax centers, also are available.

"Yes, anyone can sign up. ...The only skill needed is the desire to help people in your community," said IRS spokesman Richard Panick in an email.

August 23, 2012
I own mineral rights; how are my oil and gas revenues taxed?

Q: I own mineral rights to land in North Dakota and have been leasing those rights to oil and natural gas prospectors for approximately seven years. In February of this year I began receiving disbursement checks for the oil and gas recovered from two wells. I would like to know how this money is taxed by the federal and CA state governments. Thank you for your assistance. -- Wayne Karlstad, Elk Grove, CA

August 23, 2012
How can I deduct gambling losses on my federal taxes?

Q: How do i clam gambing loss for IRS and federal taxes? -- Rick, Fresno, CA

August 23, 2012
How do we reduce my father's taxable estate through gifting?

Q: My 94-year-old father now lives with my eldest sister and she is also the executrex/trustee of his $1.2 million estate which is in a trust. If Congress does not move to keep the current exemption level at $5 million, will he be taxed only on the amount over $1 million or the full amount? Second question: Is there any way to reduce the amount over $1 million? Third question: Can she/he gift each of us $13,000. Without paying gift taxes? Is that $13,000 for children only or is it OK to gift another $13,000 to my spouse? Please help. Thank you. -- Sherry, Rancho Murieta

August 23, 2012
How do I work out a settlement with the IRS for back taxes?

Q: Sir, We are having a very difficult time trying to pay my taxes that we owe the IRS, currently at a total of approximately $12,888.00 for two years, 2010 and 2011. I have made arrangements with the IRS and am making a payment of $100 per month for a period six years for the first period, which owe I believe 2010 $4,200. The second period is 2011 and is owing at $8,600 and the IRS is asking for double the monthly payment for six years which we cannot afford. I have already used everything that I have available in paying off other bills. My wife has a 401(k) that she can take out $5,000 against this. Is there any way the IRS could possibly take this and call it even? Would they consider this as a settlement for back taxes? -- Dirk, Folsom, CA

August 23, 2012
How does a tax deferred exchange work with two owners?

Q: I own two investment properties with my dad in Sacramento. I live in Seattle and am thinking of purchasing a residence here, but have some questions on a 1031 Exchange:

1. The title & mortgage are held in both our names for the houses in Sacramento. Do both our names have to be on the new property's title/mortgage? What happens if my Dad dies or I get married and title has to change?

2. Do the full proceeds have to be used for the down payment of the new house, or can some be used for upgrades on the property?

3. Can both our properties be rolled into the 1031 exchange?

Thanks for any assistance. -- Scott, Seattle, WA

August 17, 2012
Have IRS tax troubles? Here's where to get free help

If you've been frustrated trying to resolve an IRS tax issue, don't fret. There's free help from the Taxpayer Advocate Service, known as TAS, which works with individuals and businesses.

The TAS assists those who haven't been able to resolve their IRS issues or who face adverse economic hardships because of tax troubles. As the IRS notes: "You may be eligible if you've tried to resolve your tax problem through normal IRS channels and gotten nowhere, or you believe an IRS procedure just isn't working as it should. The worst thing you can do is nothing at all!"

It also offers specific tips for taxpayers who were clients of nationally known "Tax Lady" Roni Deutch, whose North Highlands law firm collapsed in 2011 amid accusations that it cheated clients out of millions.

For free, walk-in help in Sacramento, there's a TAS clinic open from 8:30 a.m. to 4:30 p.m. at the IRS office, 4330 Watt Ave. Or call (916) 974-5007. To find the nearest TAS office in all 50 states, call (877) 777-4778.

Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.

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